The Labour council will be raising Council Tax by 1.99% for the next 3 years, and also passing on the 2% precept rise in council tax offered by central government to help cover social care costs. In effect that is a 4% increase in council tax each year due to the Labour council’s own failure to reduce waste and mismanagement in previous years. Not only does this increase mean that less money flows into the local economy creating a virtuous circle of jobs and growth, but it takes place in an authority that already charges twice as much council tax as Wandsworth.
By setting its main Council Tax rise at 3.99%, just under 4%, the council avoids a referendum asking residents to approve the rise in tax. We urge the council, which styles itself as co-operative, to hold a referendum to ask residents if they agree with the year-on-year increases in Council Tax proposed by the Labour administration.
The Conservative Group would continue to freeze Council Tax at current levels and create savings in the following way:
· A minimum of a £2m saving from merging administrative staff with another council - This has been achieved by council administrations of different political colours across the country.
· A minimum of a £1.4m saving from joint procurement of contracts with other boroughs - This is already underway in more progressive local authorities.
· A minimum £1m saving from building a new Brixton Recreation Centre next to the current building, then demolishing the old one to build social, affordable and private homes together with retail and business units
· A new Commercial Director to raise at least £500,000 in revenue – this appointment would be part of a raft of necessary changes to Lambeth, whereby it becomes less top-heavy with layers of management and less wasteful, and would look at existing arrangements to raise and generate income.
· Saving of £800,000 by scrapping the Policy and Communications Department
· Other savings of £485,000.
There are a huge range of other measures that would enable further improvements and savings in services. For example, contracts with subcontractors that generate expenditure for the £276m capital investment programme should all be reviewed for cost-effectiveness. Lambeth has a reputation for waste and mismanagement for its larger housing capital works programmes that has not diminished.
The Conservative Group has also identified opportunities for greater savings than those outlined in the Administrations proposals, the result of which is set out in Appendix 2. The savings/additional income reflects a part year effect in acknowledgement of initiatives already in place for staffing reductions and lead in times for revised procurement arrangements, and implementing revenue-raising activity.
The Conservative Group’s recommendations to Cabinet are:
- To scrap the proposed increase in Council Tax
- To protect Grounds Maintenance services
- To contribute to Reserves
Conservative Alternative Budget
The Conservative Alternative Budget supports the principle of protecting the most vulnerable people within the community and improving the lives of all of our residents by finding savings and efficiency measures within the council itself, rather than by cutting the services that the council provides.
The council has failed to save an estimated minimum of £105m over the last 7 years that could have been invested in the borough. Residents have suffered too long from a failure to tackle the accepted management norms that leave the council reliant on central government funding, whereby inevitable reductions in the grant from central government leaves funding exposed, and the administration looking for others to blame, rather than addressing its own failure to act years beforehand.
We believe that a reduction in the tax burden on our residents and businesses will help all Lambeth residents in all our communities reach their potential by generating more employment opportunities and social mobility, rather than seeing generations of our talented residents fail to achieve their aspirations in a local economy held back by a vicious circle of high taxes, confused spending priorities, poor or limited housing and inadequate council services.
These suggested reductions in business rates and council tax should be seen in the context of the national Government’s success in achieving economic growth of 2.2% for 2016 to 2017, rising living standards, getting 2.3m more people into work nationally since 2010 (with 2.7m new jobs) and cutting income tax by £8,000 since 2010 so that a basic rate taxpayer in Lambeth has £8,000 more in their pocket.
Cllr Tim Briggs, Leader of The Conservative Group says: “Labour members should welcome this alternative budget, which allows for their spending priorities to continue, finds more money to spend on generating wealth and jobs that benefit all of our residents, and helps build in the kind of cost-effectiveness to the management of the council which has for so long been forgotten at the expense of the people that live here.”
Revenue & Capital Budget 2016/17
The Opposition Alternative Budget
The alternative Budget proposed by the Conservative Group would be a legal budget.
There is a difference of £5.185m in the net structural savings proposals for 2016/17 from those proposed by the administration.
This budget looks in less detail to the 2017/18 and 2018/19 financial position.
Since the economic crash of 2008, the Labour administration has completely buried its head in the sand and refused to accept that cuts in funding were inevitable from a highly indebted central government.
But by failing to make savings for such a long period, the Labour council now finds itself in a precarious financial situation, as national government reduces the grant to local authorities to balance its books and reduce its own reliance on borrowed money.
The Labour administration in Lambeth is the author of its own financial misfortune. With a saving of £15m to £25m a year from 2009, the council would have been able to generate between a huge £105m to £175m in savings, an estimated minimum saving of £105m.
That extra £105m (to £175m) could have been spent on services for residents, lowering taxes to increase living standards and put money into the local economy, better housing, creating jobs and a virtuous circle of investment and growth, and making Lambeth a more pleasant place to live.
Instead, Lambeth under Labour remains entrenched as now the 29th poorest borough in the country, despite having one of the largest construction projects in Europe within its boundaries.
All interested parties should reflect on why, with a Labour administration having been in power for so many years, professing a commitment to residents on lower incomes, Lambeth remains the 29th poorest borough in the country.
Next door Wandsworth, with a similar demographic and ethnic mix, has gone from being a failed, deprived Labour borough in the mid-1970s to a borough with high levels of investment, charging an average of half the council tax of Lambeth, no non-decent council homes, better services, and vulnerable residents looked after more effectively.
As a result of its own failings, the Labour administration has wasted more public money on publicity campaigns to persuade residents that its own political mismanagement is somehow the fault of central government.
The Labour administration persists in misleading residents by spinning that its ‘funding is being cut’ by 56%, rather than explaining that percentage as an approximation calculated over 8 years to give an indication of the reduction in its grant from central government, its grant being one source of its funding.
The percentage figure excludes Council Tax, the New Homes Bonus, £100m of Decent Homes funding (the highest amount given to any local authority in the whole country, re-packaged as ‘Lambeth Decent Homes funding’), Dedicated Schools Grant (£215m), Housing Benefit Subsidy, Housing Revenue Account rent (£171m), fees and charges (£265m), and many other specific grants (£153m).
Council tax rise
The Labour council is raising Council Tax by 1.99% for the next 3 years, and also passing on the 2% precept rise in council tax offered by central government to help cover social care costs.
In effect that is a 4% increase in council tax each year due to the Labour council’s own failure to reduce waste and mismanagement in previous years. Not only does this increase mean that less money flows into the local economy creating a virtuous circle of jobs and growth, but it takes place in an authority that already has a starting-point of twice the council tax of next-door Wandsworth.
By setting its main council tax rise at 3.99%, just under 4%, the council avoids a referendum asking residents to approve the rise in tax. We urge the council, which styles itself as cooperative, to hold a referendum to cooperate with residents to see if they agree with the year on year increases in Council Tax of 4% proposed by the Labour administration from an already very high starting point.
Financial situation 2016/17
The Labour administration has belatedly identified the need to make savings in 2016/17 after years of failing to do so, playing catch-up to save money it could have identified long ago, and playing catch-up to manage its responsibilities more cost effectively.
Children’s services have been deemed ‘Inadequate’ by OFSTED, requiring an extra £6.7m extra to be spent each year. This requirement appears to be on an ongoing annual basis, as it has been built into the base budget.
This time last year the council stated that it had a balanced position primarily as a result of a proposed merger of health services with Southwark, the failure of which has in effect lost the Borough the £20m in savings predicted. The much-vaunted link with Southwark was put forward as proof of the Labour administration’s commitment and ability to share services with another borough.
There has also been a rapidly-implemented programme of voluntary redundancies, with the council having to find resources of £2m to £5m being set aside to for staff payoffs, which is a significant one-off use of resources.
In last year’s alternative budget, the Opposition Conservative Group urged the council to share administrative staff with another local authority. This suggestion was condemned by Labour cabinet members at the time.
The Labour administration is now having to oversee a panicked fire sale of staff in a programme of voluntary redundancies costing up to £5m. Redundancy should be used only after attempts at redeployment have failed. Lambeth still employs a large number of agency staff, many at premium rates.
This voluntary redundancy scheme takes a cart-before-horse approach as a measure of its desperation to save money that should have been saved earlier. Better to have identified a leaner and more efficient management structure, then work out who to retain, than get rid of 300 to 500 staff, which will invariably mean a loss of collective knowledge and expertise, which in turn will make the council less cost effective.
In making these savings we welcome the opportunity for Labour colleagues to make a detailed re-assessment of spending priorities.
We still believe that in a difficult funding environment, the logic of shared services must be extended in order to ensure that other services to our residents can be protected, and that as a borough we need to have a vision of where we would like to be in 10 years time that does not rely on central government funding.
Opposition Recommendations for Creating Savings
The Conservatives would merge the staffing structure of Lambeth with another borough or boroughs in order to see the creation of a single staffing structure. We believe this would deliver savings at a minimum of up to £5m per year in each authority, on top of the savings proposed.
Initially the focus would be on merging management structures - reducing duplication between the boroughs, and the proportion of spending that goes on senior management. In the longer term there would be opportunities for further savings to reduce overheads.
Lambeth would continue to be a separate sovereign body with its own elected councillors, cabinet and leaders, maintaining its distinct identity and retaining the ability to develop policies and priorities that matter to its local residents.
The restructure that will come about as a result of sharing services will not only create savings, since in effect one team will do the job of two, but allow for improved governance, as lines of accountability within and between individuals and departments will be made clearer.
By way of example, whilst there are many excellent officers working hard within the capital works housing team, a merger with another borough would allow for a streamlined and smaller management which spent its time overseeing subcontractors, and getting contracts with subcontractors right in order to be able to oversee and enforce the priorities of the council effectively. This would finally help address the issues around tendering and execution of major works that have dogged tenants and leaseholders in Lambeth for as long as anyone can remember.
The management structure of many Lambeth departments is still top-heavy with directors and managers. Merging of staff with another borough would therefore have a direct impact on directors and managers, but a minimal effect on staff working face-to-face with residents, for example social workers and health workers. Therefore, it may be that merging the staffing structure of Lambeth with another borough would create more than a £5m saving each year. We acknowledge that the savings in the first year as a result of sharing staff would not start to be achieved until around October 2016, but we believe on the advice of officers that the savings proposed for 2016-17 are achievable.
If these proposals were to be delivered by 1st October 2016, at least £2m of this target would be delivered in 2016/17, with the balance to be delivered in 2017/18.
We are confident that if Lambeth went into a joint working relationship with another borough it would generate sufficient savings to meet the cost of freezing council tax and other suggested spending commitments.
There will be no change to the balanced position as our proposed freezing of council tax and other proposals are accompanied by an identification of additional savings in addition to those proposed by the current administration.
The Opposition Group notes that the Leader of the Opposition Labour Group on Wandsworth Council has proposed that Wandsworth consider a merger with Lambeth.
We would urge the administration to consider teaming up with councils of all political persuasions on the basis of what is effective, rather than on the basis of its own ideology.
Joint procurement of contracts
Jointly procuring contracts, with contracts being co-terminated by both authorities with authorities working together to extend a contract on a short-term basis to ensure co-termination at the same time, would generate savings of at least £1.4m in 2016/17 for 6 months of savings on contracts of over £100,000 in value, and £2.8m in 2017/18.
These are extremely conservative estimates of the possible savings. By way of example, Wandsworth is looking to generate savings of up to £10m a year by jointly procuring services, and as usual points the way forward.
All the above savings are predicated on savings in the general fund, leaving further scope for savings in the Housing Revenue Account and capital investment programme, which would also benefit from a joint procurement arrangement.
There are many examples of innovative activity throughout the country, missed by this administration, whereby councils identify opportunities to generate income that could benefit our communities if implemented here in Lambeth. One example is Southend-on-Sea Borough Council, which has established a partnership with OVO in providing energy for residents at a lower cost by generating cost savings.
This has led to an average saving of £246 on the energy bills of residents on dual fuel, and that money will have gone directly back into the local economy.
In an organisation like Lambeth facing so many financial challenges it also makes sense to bring in self-funding expertise to deal with those challenges.
By employing a Commercial Director to review existing income generating activity and identify innovative solutions, the Group is confident that a net sum of an additional £500,000 could be generated in 2016/17, with further benefits in future years.
The Commercial Director would also be able to look carefully at what assets are generating returns and what assets are capable of generating higher returns. He or she would also help forward the agenda of identifying opportunities for joint procurement and partnerships with other local authorities to make savings whilst still providing essential services.
Under the current Labour administration, an estimated £900,000 a year is spent on communications. The Conservative Group’s alternative budget will reduce this spend, ending the need for a Director of Policy and Communications, since most information can be made available on the internet and in libraries (assuming libraries are not closed down or turned into gyms), or posted on estate notice boards, with 90% of residents having access to the internet.
All but a few staff employed to sell the redundant co-operative council marketing idea will be made redundant. The remaining staff in the Policy and Communications department will report to Democratic Services, communications being an administrative rather than a political function of the council. This should save some £800,000 a year with no discernable difference.
We welcome the Labour administration’s consideration of the staff mutual plan from the Head of Libraries. We sincerely wish this plan success in saving and improving all of our libraries, and note that it predicts savings of £800,000 whilst keeping all libraries open.
For this alternative budget we prefer the Wandsworth model that the Labour administration has refused to consider. This model uses a not-for-profit provider to run libraries, and has resulted in a £1m (20%) saving. In Wandsworth this has meant no libraries closed, no loss of any of its staff on long-term contracts, and high resident satisfaction. We anticipate a saving of £200,000 from the reductions already in place with the staff mutual plan, or the unsustainable libraries-into-gyms and library closures plan of the Labour administration.
The process of tendering and awarding contracts for services
This administration has consistently failed to take a systematic approach to scrutinising the tender of contracts, leading to higher costs and a worse quality of service for residents than in other boroughs.
The Opposition welcomes the fact that changes suggested in the Conservative alternative budget last year have been adopted by the Labour administration, particularly ensuring that procured contracts worth over £100,000 a year need cabinet member approval.
The fact that the cabinet member will sign off on the winning contract should improve accountability, as that cabinet member will finally take responsibility for the quality of the tendering process and the reasons for the contract being awarded to a particular contractor, rather than simply relying on the expertise of officers.
However, we again urge that all information relating to the tenders and the winning bid should be made available on the internet after the contract is awarded, as a condition of businesses and organisations applying. Openness about council decisions on the £582m spent each year on contracts is good for business, good for residents, and good for the management of services.
These changes would improve consistency of approach, create an environment in which service contracts can evolve over time to provide better services for residents at a lower cost, help everyone make a more informed comparison with other boroughs as to how services are tendered, and provide more clarity around the reasons for awarding contracts to businesses and organisations working as sub-contractors.
Building a new Brixton Recreation Centre
Brixton Recreation Centre is haemorrhaging money, is not fit for purpose, and residents deserve better.
The Labour administration wants to seek external funding to try to improve parts of this old, crumbling building, proposing to spend £6m on a capital investment programme to retain its functionality for the next 7 years.
Having consulted with officers we believe that the £6m put aside should be reduced to £5m to allow for keeping it open for a maximum of another 4 years, saving the council a minimum of £1m, to be re-invested.
During that time we urge the council to work with developers to build a new Brixton Recreation Centre on the site of Pop Brixton and the car park next to it, ready for when the Pop Brixton lease expires in 2018. The aim would be to create a better recreation centre with all the same sports and leisure facilities, whilst keeping the current Brixton Rec open in the meantime. Pop Brixton should be given as much help as possible to successfully relocate.
Once the new facility is open, the current Brixton Recreation Centre should be demolished, and in its place build a mixture of social, affordable and private housing, with commercial retail properties underneath. This will help achieve our Conservative Group pledge to ensure that at least 1,000 new homes in the borough get built by 2018. This development should be built at no cost to the council.
The £1m saving would go into the capital budget and would be used to contribute towards more homes being built in the borough to exceed the target of 1,000 new homes by 2018.
Opposition recommendations to Protect Services
Any recommendations that we make to protect services that require additional funds all come from the money saved by the recommendations above, ensuring a balanced budget.
Council tax freeze
Council tax income of £99m per year accounts for around 35% of the council’s total annual income, with the balance being funded by central government via a formula grant and a business rates top-up.
Freezing the general increase in Council Tax would save taxpayers £1.9m in 2016/17. This sum should find its way into the economy to generate greater economic activity within Lambeth, and given the cumulative effect of reducing the council tax burden for residents, a cumulative increase in jobs and opportunities for our residents.
In 2015 Citizens’ Advice warned that council tax had overtaken credit cards to become the most common debt problem in the country, which highlights the recklessness of this administration increasing council tax by nearly 4% on top of a very high starting-point, hurting the very people the Labour administration claims to want to help.
Parks and green spaces
We believe that the 50% cut in the budget for parks and green spaces since 2014/15 is unworkable, and an abdication of the responsibility entrusted to the Labour council by residents to maintain these spaces on our behalf. Parks and green spaces need to be properly managed to ensure that everyone has access, whatever their income or background.
We note that groups of volunteers, such as SCCoop in Streatham, are looking to take on management of some green spaces, including taking on some financial control, and we do not wish to set them up to fail.
At the moment the Labour administration is suggesting reducing the number of paddling pools from 7 to 4 (saving £80,000), reducing the number of public toilets which are open (£150,000), reducing the number of parks which are locked overnight (£120,000), reducing the frequency of litter collection during winter (£450,000) and reducing horticultural maintenance (£500,000). This amounts to a cut of £1.3m and represents a cut of 36.5% on the 2015/16 budget. This is very poor value saving - the attempt should be to run all services better that currently exist, and get more for less.
Wandsworth has created a staff mutual from an in-house parks maintenance service, which has reduced its spending on parks by 20%, saved the jobs of its staff, and been able to procure work from other local authorities. We would follow this model and set up a staff mutual, which should generate savings of 20% without any effect on the service.
This would ensure that the service is maintained and improved from its current level, with no loss of service. Once the 20% saving is factored in from the original service, this would create a cost to the council of £590k.
For many years Lambeth has consistently overspent as a result of higher costs being incurred for demand-led services, and as a more financially responsible administration looking to make sure spending priorities were kept, the Conservative Group would work with officers to ensure that risk was properly managed.
Lambeth has the lowest level of reserves compared with other London councils, at 20% of net revenue expenditure (£86m of £432m expenditure), compared to other comparable boroughs such as Hackney (75%), Wandsworth (80%) and Greenwich (85%). Although officers have expressed confidence that the level of reserves is adequate, we believe that it would reduce the council’s exposure to risk to increase the reserves to a higher level, and will do so.
Therefore, we would look to add the remaining saving of £2.695m to the reserve fund and continue to do so over the next few years.
Looking to the future
Whilst the focus of Group’s proposals primarily considers the impact on the 2016/17 budget, there are other ways in which the residents of the Borough can benefit from the Conservative Group’s forward-thinking agenda:
· Increase affordable housing. Reducing the affordable housing requirement from 40% to 30% for new developments would to increase the number of affordable homes in the borough, with more jobs and greater spending power to the council, and an increase in affordable housing as a percentage of the increase in new developments overall. Direct income to the council would increase in terms of Community Infrastructure Levy (CIL), which could then be recycled to support additional social housing.
The council would also benefit from New Homes Bonus and additional council tax to support the General Fund. 100 additional residential units would generate £148,000 in new Homes Bonus and £141,700 in Council Tax (assumed Band F).
These sums aside, it is reasonable to assume that an uplift of 10% in development activity could be generated at the very least in North Lambeth and Waterloo wards, and that would generate an additional £4m in CIL.
· Reduction in Business Rates from 2020/21, resulting in greater income. Research suggests that a reduction in business rates under the right circumstances can result in an increase in investment and tax revenue. Although this research has only been done in relation to corporation tax, the same underlying principles apply for business rates set by local authorities. The council should consider how best to reduce business rates in advance of 2020/21.
· Sharing children’s services with another borough or boroughs would enable cost savings to be made going forward, and remains the only viable future that can both safeguard children and be cost effective. However, these changes need to wait until after the department has stabilised and is functioning properly following the implementation of any changes as a result of the OFTSED report that found that children’s services were ‘Inadequate’. The Labour administration needs to use funds more creatively going forward to fund and improve front-line services if it is going to ensure that no more children are put at risk.
· Consolidating call centres – this would take some time, as consideration would need to be made of break clauses, TUPE and relocation, but we anticipate savings of at least £200,000 split between the General Fund and Housing Revenue Account.
Appendix 1 – Proposed Changes to 2016/17 Budget
New Growth Items
Do not implement 1.99% increase in Council Tax
Protect Grounds Maintenance service
Contribution to Reserves
Merge Staffing Structure with another Borough(s)
Appoint Commercial Director – net savings
Joint Procurement of services with partner Boroughs
Amendments to Administrations proposals – see Appendix 2 below
Total Additional Growths & Savings
Appendix 2 – Revision to Administration Proposals
Highways reactive maintenance - Increased on basis that economies of 5% should be achievable and savings earmarked for 2017/18 can be brought forward
Capita Contract - Challenge to ‘minimal risk’ scenario – further economies need to be found
ICT licensing for Multivue - Savings on such a large budget are marginal – must be further scope for more opportunities to be explored including reduced licence and hardware costs due to lower staff numbers
Subscriptions and Publications - Not a challenging target – need to extend to deliver meaningful savings
Print - Not a challenging target – need to extend to deliver meaningful savings
Libraries - Net benefit of alternative proposal – Joint Service Arrangements
Net increase in savings